China Covid relaxation, Hong Kong shares rise

Malaysian Prime Minister Anwar Ibrahim and Pakatan Harapan, the coalition he leads, “contradicted their campaign message of fighting corruption” by appointing Ahmad Zahid Hamidi as one of two deputy prime ministers, according to Adib Zalkapli, director of BowerGroupAsia.

Hamidi faces 47 charges of corruption and money laundering.

“The optics are definitely not going to be very good for the government with the deputy prime minister going back and forth to court to face the charges,” Adib told CNBC’s “Squawk Box Asia.”

But he said the reality is that the unity government needs UMNO and Barisan Nasional – which is led by Hamidi – on its side if it wants to “survive at least for the next year,” he added.

Anwar announced his cabinet late on Friday. Market reaction in Malaysia was slightly negative, with the benchmark KLCI down 0.62% in the afternoon in Asia.

— Abigail Of

Indonesia’s GoTo Group — the merged entity of ride-hailing giant Gojek and e-commerce marketplace Tokopedia — has lost 68.5% of its initial value of 400 trillion rupiah ($28 billion) since its initial public offering in April.

On Thursday, pre-IPO shareholders such as Alibaba and SoftBank opted out of a secondary offering after the lock-up expired on November 30, sending the share price down 7%.

The companies had agreed to an eight-month lock-up period to support GoTo’s share price after the IPO as early shareholders.

Shares continued to fall in Monday’s session, with the company’s valuation at around 126 trillion rupiah, according to CNBC calculations. GoTo shares have fallen over the year, losing 68% of their value.

– Sheila Chiang

Australia’s central bank is expected to raise the cash rate by 25 basis points to 3.1% on Tuesday, according to economists polled by Reuters.

It would be the Reserve Bank of Australia’s eighth hike this year, and the third consecutive 25 basis point increase since October.

In a statement after its November meeting, the RBA said the “full impact” of the series of cash rate hikes is ahead.

Meanwhile, Matt Simpson, senior market analyst at City Index, said there is potential for a pause in rate hikes further ahead.

“The ceiling for a break is certainly building,” he said. “Some measures of inflation expectations are moving lower, and monthly inflation pressures suggest that inflation has peaked.”

Inflation in Australia remains well above the RBA’s target of between 2% and 3%, although it saw a slight easing in October, according to the central bank’s monthly consumer price indicator.

— Charmaine Jacob

Strategists at Morgan Stanley have raised their recommendation for Chinese stocks to overweight, according to a Sunday note.

The upgrade marks the end of the firm’s balanced stance on Chinese stocks that it has held for nearly two years, said strategists led by Laura Wang.

Morgan Stanley noted several factors that have seen “meaningful positive developments” since November, including what the firm sees as “a confirmed path toward eventual post-Covid reopening.”

– Michael Bloom, Jihye Lee

Chinese technology, consumer and travel-related firms listed in Hong Kong saw strong gains in early trade after some cities in China saw some easing of Covid restrictions.

Tech heavyweights Tencent rose 5.5% and Meituan gained 3.5%, while Alibaba jumped 4.72% and Xiaomi gained 7.31%. EV stocks such as Li Auto jumped 9.19% and Nio climbed 11.5%.

Meanwhile, Hong Kong-listed casino stocks also rose, with MGM China rising 12.44%, Wynn Macau up 12.35% and Sands China up 7.5%. Galaxy Entertainment rose 3.61% and SJM Holdings rose 4.82 percent.

Hotpot restaurant operator Haidilao rose by 15%, and the shares of the airlines also rose. China Southern Airlines and China Eastern Airlines each rose more than 5%, while Air China increased 4%.

The broader Hang Seng index rose 3.21 percent.

— Abigail Ng, Jihye Lee

The Caixin/S&P Global Services Purchasing Managers’ Index for November came in at 46.7, representing the lowest reading in six months.

The pressure also marks the third consecutive month of declines in output and new work, after October’s reading came in at 48.4, while September’s pressure was 49.3.

PMI readings are sequential and represent month-to-month changes in factory activity. The 50-point mark separates growth from contraction.

“The decline was generally solid but remained weaker than the drop seen during the previous large wave of Covid-19 cases from March to May,” Caixin said in a release.

“Efforts to contain the spread of Covid-19 amid a noticeable increase in case numbers in recent weeks weighed on service sector activity and customer demand across China during November,” it added.

China’s official non-manufacturing PMI released last week was 46.7, the lowest since April 2022.

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The Chinese currency strengthened to around 7 against the US dollar after the latest reports signaled further loosening of China’s Covid policy.

The offshore yuan traded at 6.9861 against the dollar, strengthening above 7 levels for the first time since mid-September.

Beijing and Shenzhen are taking steps to loosen testing requirements and quarantine rules despite the daily number of cases nearing all-time highs.

The latest moves come about a week after public unrest erupted over the strict measures in various parts of the country.

– Jihye Lee

A veteran Schroders fund manager has named two global retailers that are about to “dominate” their sector.

Andrew Brough, who runs the Schroder UK Mid Cap Fund, said the two conservatively run companies are gaining market share ahead of a recession by quietly acquiring failing rivals on the cheap.

One of these stocks has already risen by 30% this year, while the benchmark index has fallen by 29%.

CNBC Pro subscribers can read more here.

– Ganesh Rao

Stock futures fell while bond yields rose in response to the 8:30 a.m. jobs data that came in stronger than economists expected.

Here’s how each major futures index and the notable bond yields moved in the 30 minutes leading up to and following the release of the data:

Goldman Sachs sees an opportunity in electric vehicles that are on an “upward trend.”

That trend will increase as electric cars become “increasingly technology-driven” and easier to build, Goldman analysts said in a Dec. 1 report.

That’s set to benefit one global stock, Goldman said, giving the stock up to 90% upside in its bull case for the firm.

CNBC’s Pro subscribers can read more here.

— Weizhen Tan

Job growth was stronger than expected in November despite the Federal Reserve’s efforts to cool the labor market.

Nonfarm payrolls rose by 263,000 last month, while the unemployment rate was unchanged at 3.7%, according to the Labor Department on Friday.

Payrolls were expected to jump by 200,000 more jobs, according to Dow Jones consensus estimates. Unemployment was expected to remain at 3.7%.

Stock futures fell after the earnings release.

—Sarah Min